Non-Government organizations are established for the welfare of society. They also need some financial assistance to run their welfare related work so they arrange their funds through a donation made to them by the government or individuals or other bodies. In order to attract finance for these welfare organizations, some tax reliefs and benefits are provided by the government to those making donations.
All NGOs (Non-government organizations) should avail the benefit of such provisions to attract potential donors. Section 35AC is one of such sections. Section 35AC is similar to 12A and 80G but quite different in their attributes and characteristics. Also, the benefits availed under both of them are different. 12A and 80G registration are considered as the most important for the NGOs (non-government organizations), trust and societies. 35AC can be stated as one of the key provisions under the income tax act and also quite beneficial and important for NGOs (Non-government organization), trust and societies. If understood properly and coherently 35AC registration can be used effectively to raise the funds and resources of NGOs (Non-government organization), trust and societies.
The main motive behind the formation of section 35AC was to encourage business organizations and entities to put their contribution and increase it in the field of social and economic welfare. Under section 35AC organizations that are having income from business and professions can get a 100% deduction. Also, the benefits are not limited to the NGOs (non- government organization), trust and societies. There are several benefits availed by entities, firms or organizations in the corporate sector too.
Corporations can fulfill their necessary objectives of corporate social responsibility by making a contribution towards the eligible projects. Therefore, can get the tax deduction benefits under section 35AC. Hence, we see that Section 35AC is beneficial to the NGOs and the corporate sector too.
Section 35AC provides benefits to only those assess who have income from the head business and professions. A charitable organization can register them under section 35AC by applying to the ational Committee under rule 11F and 11-O. This approval under section 35AC is not for a permanent basis and has a validity of three years. If an NGO succeeds in getting this registration then it stands a very good chance of mobilizing funds from the business and corporate sector.
1. Tax benefits to the donors: A donor who is a resident of India or a non-resident holding an Indian passport and also having taxable income in India have a right to claim income tax benefits from the donation made to an NGO that is registered under section 35AC, 80G. A person who is a Resident Indian must have a taxable income in India and is donating to an NGO that is having valid tax exemption certificate under section 35AC, 80G, and 80GGA of the income tax act of 1961 of India.
A person who is Non-Resident Indian must have an Indian passport and is donating to an NGO that is having valid tax exemption certificate under section 35AC, 80G, and 80GGA of the income tax act of 1961 of India.
2. Deduction with respect to eligible schemes and projects Assesses which have income from head business or profession under section 35 AC is available for the deduction. Assesses who do not have income from business or profession, section 80G provides a deduction on the donation made to eligible projects under section 35AC.
Development of Irrigation resources
Medical camps in rural areas
Rural health programs
Construction for a school building for children belonging to economically weaker sections of societies.
Supportive services for women engage in production work.
Creation of Employment opportunities for the urban and rural population
Any program for the uplift of the rural poor and urban slum dwellers.
Establishment and running of non-conventional and renewable sources of energy systems.
Soil and water conversion
Promotion of sports
Land development and recovering of waste land with special concern on ecological improvement.
Below are the documents required for Registration under section 35AC
Name and address of a person managing the affairs of the institutions and associations
Profit and loss account, Audited balance sheet & expenditure account for the latest and two preceding years.
If the institution and association are notified under section 10 (23) (C) or if approved for the purposes of section 80G then, in that case, particulars of such approval are required.
Particulars about the activities of the association and institution during 3 years preceding the date of application or in case association or institution are less than 3 years old particulars are required since inception.
1. What is 35AC Registration?
Section 35Ac is similar to 12A and 80G but quite different in their attributes and characteristics. The 35AC is also beneficial and important for the NGO’s, trusts and societies. It can be effectively used to raise the funds and resources for the NGO’s, trust or the societies.
2. What is the main objective behind 35AC?
The main reason was to encourage business organizations and other societies to put their contribution and it in the field of social and economic welfare.
3. What is 35AC Certification?
Approval of 35AC helps NGO to encourage donors to donate for the government-approved social welfare projects by giving the 35AC certificate to the donor.
4. What are the advantages of the 35AC registration certificate?
Every NGO is qualified to get registered under section 35AC
5. Which types of NGO’s are available for 35AC Registration?
Rural health program
Medical camps in rural areas
Soil and water conversion
Development of irrigation Resources
Creation of Employment opportunities for the rural and urban population
Supportive services for women to engage in production work.
Land development and recovery of waste land
Establishment of renewable sources of the energy system.
6. What are the documents required for 35AC Certification?
Name and address of the persons managing and affairs of the association or institution.
Audited balance sheet, profit and loss account or income and expenditure account for the latest year and two preceding year
7. Who can claim deduction under section 35AC?
Assesses offering income under business and profession can claim deduction under 35AC for the payment made to the approved organizations
8. Who can make an application for approval under eligible projects under section 35AC?
Any local authority or public sector company or an association and institution can make the application.